Housing Foreclosures Conducive to U.S. Economic Recovery
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Fermentation of the United States is continuing wave of mortgage foreclosures, increased awareness of the U.S. credit crunch, concerns the deterioration of debt deflation. Even some of the market that it shares the harmful effects of foreclosures surge as much as the subprime crisis may be damaging.
Recently published studies have reported that JP Morgan Chase, Bank of foreclosures coming due to the loss arising from disputes could total as high as 550 to 1200 billion U.S. dollars. Goldman Sachs estimates the worst case of loans to the banking law for breach of contract disputes losses suffered 84 billion U.S. dollars.
JP Morgan Chase in a recent report that there are about 2 trillion dollars of loans has been breach or default may be accounted for payment of the United States from 2005 to 2007 the total 6 trillion mortgage-third of the breach of contract loans in the banking sector, two rooms, bond investors and insurers have suffered the highest total operating loss of 1.1 trillion. Foreclosure of the problem can be seen. The so-called "foreclosure" means the bank could not afford to pay for those mortgage owners to take back the practice of housing mortgages, the owners then would have no right to redeem the property, generally and domestic calls "outages, repossession," similar to the . In fact, since the sub-prime crisis, case to the United States showed a surge in foreclosure situation. The data show the first 9 months of this year banks were on the 816,000 housing foreclosures, and by the end of this data is expected to reach 1.2 million.
Because the U.S. mortgage and derivatives of highly structured, and structured financial derivative products such investors around the world, a large number of foreclosures will lead to all kinds of mortgage-based derivatives losses incurred, so the market is indeed reason to fear that the U.S. banking system continuous fermentation of the risk of foreclosure surge is likely to spread to the world, and thus a negative impact on the global economy.
However, with the sub-prime crises, the current spread of the financial markets in the U.S. foreclosure surge, the market has long been predicted that the market is not ready is not a sudden event, which weakened its devastating financial markets. Moreover, from the perspective of causal inheritance, continuous fermentation is the wave of subprime mortgage foreclosure crisis and subsequent events, rather than independent of the sub-prime problem. As the subprime mortgage crisis, the U.S. government has taken a great deal of support and regulatory policies, such as shares of financial institutions, asked Goldman Sachs and Morgan Stanley into bank holding companies such as trillions of dollars of toxic assets and acquisition plans, only temporarily brake living and reduce the shock of the crisis to avoid financial system collapse. This is a temporary stop the bleeding in financial markets and prevent the spread of viral infection, but the financial market risks being suppressed, but did not eradicate the root cause of the crisis. With unemployment rising, house prices continued to fall, there foreclosure tide.
Therefore, I prefer the current wave of foreclosures as the subprime mortgage market, self-cleaning circulation of complications during a crisis, the normal operation of foreclosure actions on the U.S. financial market has blood effect. Although the continuing wave of foreclosures and the U.S. financial markets will bring new risks to global investors, but an objective means that the U.S. financial market is through market-based debt restructuring and risk reset. After all, the borrower's mortgage foreclosure, strictly speaking, is a financial restructuring of private or family behavior, and through financial restructuring will allow the borrower's own balance sheet structure to be reconfigured so as to improve its financial position, and to some extent, to improve their risk tolerance. Obviously, this is out of debt deflation and financial market credit crunch and restore vitality of micro-foundation for the market.
Although the foreclosure tide may generate new pressures on prices, but they contribute to the foreclosure Zichan to find the right investors to the risk throughout the financial markets for the re-configuration, activate the market activity for the U.S. economic recovery provide financial support. This is similar to non-performing asset restructuring, said to be strictly non-performing assets to asset allocation to the department can not effectively manage, and through the reorganization of non-performing assets, asset re-allocation to the ability to effectively manage these assets in the hands of non-performing assets to become assets that can create value.
If the subprime mortgage crisis is the asset price bubble in the farewell ceremony, the current wave of foreclosures continue to occur will likely be turning crises into opportunities in the recovery process of purifying agent, is the U.S. and global economy out of crisis, on the road towards recovery blood circulation process, not through the purgatory of foreclosure tide, the U.S. economic recovery will remain fragile could not escape, second bottom of the potential risk of long-term. |
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By :
Jessie Stone
Submitted
2010-10-25 23:42:15 |
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